8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

February 15, 2006

Date of Report (Date of earliest event reported)

THE PNC FINANCIAL SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

Commission File Number 001-09718

Pennsylvania	25-1435979
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One PNC Plaza

249 Fifth Avenue

Pittsburgh, Pennsylvania 15222-2707

(Address of principal executive offices, including zip code)

(412) 762-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 15, 2006, The PNC Financial Services Group, Inc. (the “Corporation”) issued a press release and held a conference call for investors regarding the acquisition of Merrill Lynch’s investment management business by the Corporation’s majority-owned subsidiary, BlackRock, Inc. The Corporation also provided electronic presentation slides on its web site used in connection with the related investor conference call. Copies of the press release and electronic presentation slides are included in this Report as Exhibits 99.1 and 99.2, respectively, and are furnished herewith.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits. The exhibits listed on the Exhibit Index accompanying this Form 8-K are furnished herewith.

-2-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE PNC FINANCIAL SERVICES GROUP, INC.
	(Registrant)
Date: February 15, 2006	By:	/s/ Samuel R. Patterson
		Samuel R. Patterson
		Controller

-3-

EXHIBIT INDEX

Number	Description	Method of Filing
99.1	Press release dated February 15, 2006	Furnished herewith
99.2	Slide presentation for the investor conference call on February 15, 2006	Furnished herewith

-4-

EX-99.1

Exhibit 99.1

CONTACTS:

MEDIA:

Brian E. Goerke

(412) 762-4550

corporate.communications@pnc.com

INVESTORS:

William H. Callihan

(412) 762-8257

investor.relations@pnc.com

PNC TO REPORT $1.6 BILLION GAIN ON THE MERGER OF BLACKROCK AND

MERRILL LYNCH INVESTMENT MANAGERS

PNC Retains Its Significant Investment in BlackRock

BlackRock To Become Largest Publicly Traded Asset Management Company

PITTSBURGH, Feb. 15, 2006 – The PNC Financial Services Group, Inc. (NYSE: PNC) announced today that BlackRock (NYSE: BLK) and Merrill Lynch (NYSE: MER) have signed a definitive agreement to create one of the top ten investment management companies in the world with assets under management approaching $1 trillion. BlackRock will acquire Merrill Lynch’s investment management business in exchange for a 49 percent ownership interest.

This transaction is expected to dramatically increase BlackRock’s net income. As a result, PNC anticipates having a greater earnings contribution from BlackRock. The transaction is expected to be immediately accretive to PNC.

“Our partnership with Larry Fink and BlackRock over the past decade has created an extraordinary asset management platform with an unprecedented record of performance and growth,” said James E. Rohr, chairman and chief executive officer of PNC. “This transformational merger is the next logical step in BlackRock’s evolution as a global leader in asset management. The transaction also enables PNC to retain a sizable investment in BlackRock, significantly improve our capital flexibility and create substantial strategic opportunities and earnings benefits for our shareholders.”

- more -

PNC To Report $1.6 Billion Gain On The Merger of BlackRock and

Merrill Lynch Investment Managers – Page 2

Upon the closing of this transaction, PNC will continue to own 44.5 million shares of BlackRock, representing an ownership interest of approximately 34 percent. Thereafter, BlackRock will be deconsolidated from PNC’s financial statements and will be accounted for using the equity method. As a result of this transaction, PNC’s investment will increase to approximately $3.2 billion and PNC will record an after-tax gain of approximately $1.6 billion based on BlackRock’s closing share price of $131.51 on February 10, 2006. This gain will substantially improve PNC’s capital position. On a pro forma basis, PNC’s tangible common capital to tangible assets ratio of 5.0 percent at December 31, 2005 would improve to 7.3 percent, thereby providing PNC with enhanced capital flexibility to invest in its businesses and/or repurchase shares of common stock. Currently, the PNC Board of Directors has authorized the purchase of up to 20 million shares. Further, PNC will have an additional unrecognized pretax gain of approximately $2.6 billion related to its 34 percent ownership in BlackRock.

PNC will have two seats on the new combined company’s Board of Directors including one director on the Executive Committee. The transaction must be approved by BlackRock shareholders and is expected to close later this year subject to securing appropriate regulatory and other approvals. PNC currently controls more than 80 percent of the voting interest in BlackRock and will vote its interest in support of the transaction.

PNC purchased BlackRock in February 1995 for approximately $240 million. Since then, BlackRock’s assets under management have grown from approximately $24 billion to $453 billion, contributing to a current market capitalization of approximately $8.4 billion and a $5.6 billion increase in the value of PNC’s initial investment.

CONFERENCE CALL AND SUPPLEMENTARY INFORMATION

PNC Chairman and Chief Executive Officer James E. Rohr and Chief Financial Officer Richard J. Johnson will hold a conference call for investors today at 10:30 a.m. Eastern Time regarding this announcement. Investors should call five to ten minutes in advance of the conference call at 800-990-2718 (domestic) or 706-643-0187 (international). A taped replay of the call will be available for one week at 800-642-1687 (domestic) or 706-645-9291 (international) by entering conference ID 5590356. Supplementary information, which includes significant financial information that will be discussed on the conference call, will be available on PNC’s website at www.pnc.com under “For Investors” prior to the beginning of the conference call.

In addition, internet access to the call, which includes audio (listen-only) and slides with supplementary information regarding the transaction, will be available through PNC’s website at

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PNC To Report $1.6 Billion Gain On The Merger of BlackRock and

Merrill Lynch Investment Managers – Page 3

www.pnc.com under “For Investors.” A replay of the webcast will be available on PNC’s website for 30 days.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This press release contains forward-looking statements with respect to PNC’s outlook or expectations with respect to the planned transaction between BlackRock and Merrill Lynch and the impact of the transaction on PNC’s future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. The forward-looking statements in this press release speak only as of the date of this press release, and PNC assumes no duty, and does not undertake, to update them. In addition to factors previously disclosed in PNC’s SEC reports (accessible on the SEC website at www.sec.gov and on PNC’s website at www.pnc.com) applicable to PNC’s business generally, as well as factors previously disclosed in BlackRock’s SEC reports (accessible on the SEC website and on BlackRock’s website at www.BlackRock.com) applicable to BlackRock’s business generally, the forward-looking statements in this press release are subject to the following risks and uncertainties:

• Completion of the transaction is dependent on, among other things, receipt of regulatory and other approvals, the timing of which cannot be predicted with precision at this point and which may not be received at all.

• The impact of the completion of the transaction on PNC’s financial statements will be affected by the timing of the transaction and the market price of BlackRock at the time of closing.

• The impact of the transaction on PNC’s future financial results depends on the following: (1) BlackRock’s future performance and BlackRock’s ability to integrate its business with the Merrill Lynch Investment Managers business and to achieve planned synergies and cost savings, (2) BlackRock’s dividend payout ratio going forward, which is assumed to be 40 percent, and (3) PNC’s ability to take advantage of the increase in its capital resulting from this transaction to pursue various capital management options such as share repurchases and making investments in its businesses, which could be affected by PNC’s future financial performance and other factors affecting PNC’s capital needs and flexibility.

The PNC Financial Services Group, Inc. is one of the nation’s largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.

# # #

EX-99.2

The PNC Financial Services Group, Inc.

Impact on PNC of the Merger of BlackRock

with

Merrill Lynch Investment Managers

February 15, 2006

The PNC Financial Services Group, Inc.

Impact on PNC of the Merger of BlackRock

with

Merrill Lynch Investment Managers

February 15, 2006

EXHIBIT 99.2

2

Cautionary Statement Regarding

Forward-Looking Information

Cautionary Statement Regarding

Forward-Looking Information

This presentation contains forward-looking statements with respect to PNC’s outlook or expectations

with

respect

to

the

planned

transaction

between

BlackRock

and

Merrill

Lynch

and

the

impact

of

the

transaction on PNC’s future performance.  Forward-looking statements are subject to numerous

assumptions, risks and uncertainties, which change over time. The forward-looking statements in this

presentation

speak

only

as

of

the

date

of

this

presentation,

and

PNC

assumes

no

duty,

and

does

not

undertake, to update them. In addition to factors previously disclosed in PNC’s SEC reports

(accessible

on

the

SEC

website

at

www.sec.gov

and

on

PNC’s

website

at

www.pnc.com)

applicable

to

PNC’s

business

generally,

as

well

as

factors

previously

disclosed

in

BlackRock’s

SEC

reports

(accessible

on

the

SEC

website

and

on

BlackRock’s

website

at

www.BlackRock.com)

applicable

to

BlackRock’s

business generally, the forward-looking statements in this presentation are subject to the

following risks and uncertainties:

Completion of the transaction is dependent on, among other things, receipt of regulatory and other

approvals, the timing of which cannot be predicted with precision at this point and which may not

be received at all.

The impact of the completion of the transaction on PNC’s financial statements will be affected by

the

timing

of

the

transaction

and

the

market

price

of

BlackRock

at

the

time

of

closing. 

The impact of the transaction on PNC’s future financial results depends on the following:  (1)

BlackRock’s

future

performance

and

BlackRock’s

ability

to

integrate

its

business

with

the

Merrill

Lynch Investment Managers business and to achieve planned synergies and cost savings, (2)

BlackRock’s

dividend payout ratio going forward, which is assumed to be 40%, and (3) PNC’s

ability to take advantage of the increase in its capital resulting from this transaction to pursue

various

capital

management

options

such

as

share

repurchases

and

making

investments

in

its

businesses, which could be affected by PNC’s future financial performance and other factors

affecting PNC’s capital needs and flexibility.

3

BlackRock

Current

    BlackRock   

Pro Forma

PNC Retains Share Ownership in

Larger and More Valuable Company

PNC Retains Share Ownership in

Larger and More Valuable Company

19.5

44.5

Others

PNC

New BlackRock

creates a top ten

investment manager worldwide

with approximately $1 trillion in

assets under management

Immediately accretive to PNC’s

earnings

$1.6 billion after-tax gain

expected to be recognized upon

closing

Additional unrecognized pre-tax

gain on BlackRock

investment of

$2.6 billion

Significantly enhances capital

flexibility

BlackRock

Common Share Ownership

19.5

44.5

65.0*

Merrill Lynch

BlackRock

contribution

to PNC 2005 earnings

12%

13%

PNC retains share

ownership in much

larger and more

valuable company

64.0

129.0

70%

34%

*

Common Stock Equivalents

Shares in millions

4

PNC’s Estimated Gain on Transaction

PNC’s Estimated Gain on Transaction

Book

Value

Estimated

Increase in

Book Value

After Closing

$58

Value Per Share

of BlackRock

PNC’s

Investment

Estimated

Market Value

Over

Book Value

$59

Unrecognized

Gain

$2.6 Billion

Pre-tax

Gain*

$2.5 Billion

$641 Million

Investment

Book Value

$131.51

$72.48

65.0 Million

Shares Issued

@ $131.51

Market Value

As of 2/10/06

Book Value

As of 12/31/05

$14.41

BlackRock

Shares

Held by PNC

X 44.5 million

X 44.5 million

X 44.5 million

After-tax

Gain

$1.6 Billion

Pre-tax gain is net of $55 million of goodwill

Note: This calculation will adjust through the closing date

*

*

5

Positive Financial Impact on PNC

from BlackRock

Transaction

Positive Financial Impact on PNC

from BlackRock

Transaction

BlackRock

earnings contribution increases from 12% to 13% of total PNC net income

Noninterest income to total revenue remains above 60%

Efficiency ratio improves by 300 bps

Tangible capital ratio improves from 5.0% to 7.3%

(a)

BlackRock

net income is based on IBES 2006 mean estimate; pro forma numbers include projected MLIM results and pre-tax synergies of $70

million

(midpoint)

plus

other

accounting

related

adjustments

and

assuming

transaction

closed

on

January

1,

2006

(anticipated

closing

is

September 30, 2006)

(b)

PNC’s

34%

portion

of

BlackRock’s

estimated

2006

net

income

from

combined

company

tax

effected

at

24%;

assumes

40%

dividend

payout

ratio

(c)

PNC’s

estimate

of

BlackRock’s

2006

net

income

contribution

prior

to

transaction

tax

effected

at

7%  

(d)

Assumes no PNC share repurchases

BlackRock

net income from combined company

$746

(a)

PNC

after-tax

portion

of

BlackRock

net

income:

After transaction

$193

(b)

Before transaction

176

(c)

Incremental

BlackRock

net

income

contribution

to

PNC

$17

Accretion to PNC’s earnings per share

$0.06

(d)

2006 Estimate

$ millions, except earnings per share

Estimated 2006 Accretion to PNC’s Earnings Per Share

PNC 2005 Pro Forma Highlights Resulting from BlackRock

Transaction

6

Appendix

7

8

Cash

$3.5

($0.5)

$3.0

Securities & short-term investments

23.6

(0.3)

23.3

Investment in BlackRock

0

0.7

$2.5

(a)

3.2

Goodwill & other intangible assets

4.5

(0.5)

4.0

Other assets

60.4

(0.6)

59.8

Total assets

$92.0

($1.2)

$2.5

$93.3

Other liabilities

$65.9

($0.7)

$0.9

(b)

$66.1

Borrowed funds

16.9

(0.2)

16.7

Minority

and

noncontrolling

interests

in consolidated entities

0.6

(0.3)

0.3

Equity

8.6

0

1.6

(c)

10.2

Total liabilities & equity

$92.0

($1.2)

$2.5

$93.3

$ billions

PNC

Consolidated

12/31/05

Impact of BlackRock

Deconsolidation

on PNC’s Balance Sheet

Impact of BlackRock

Deconsolidation

on PNC’s Balance Sheet

BlackRock

Deconsolidating

Adjustments

(a)

PNC’s

Investment

equals

its

ownership

percentage

of

BlackRock’s

pro

forma

book

equity

(b)

PNC’s Deferred Income Tax accrual

(c)

Increase equals the after-tax gain recorded on this transaction

Appendix

PNC

Pro forma

12/31/05

Transaction

Adjustments

9

Impact of BlackRock

Deconsolidation

on PNC’s Income Statement

Impact of BlackRock

Deconsolidation

on PNC’s Income Statement

(a)

Represents PNC’s 2005 pro forma average ownership of approximately 35% of the 2005 pro forma net income of

BlackRock

excluding synergies and other accounting adjustments

(b)

Represents

effective

tax

rate

of

24%

on

BlackRock’s

pro

forma

net

income

Appendix

Net interest income

$2,154

($35)

$2,119

Noninterest

income

4,162

(1,191)

$221

(a)

3,192

Total revenue

6,316

(1,226)

221

5,311

Provision for credit losses

21

0

0

21

Noninterest

expense

4,317

(851)

0

3,466

Income before minority and noncontrolling

interest and income taxes

1,978

(375)

221

1,824

Minority

and

noncontrolling

interest

in

income of consolidated entities

49

(74)

0

(25)

Income taxes

604

(138)

53

(b)

519

Net income

$1,325

($163)

$168

$1,330

$ millions

PNC

Consolidated

2005

BlackRock

Deconsolidating

Adjustments

PNC

Pro forma

2005

Estimated

Pro forma

BlackRock